Wage and Hour Law Update : Wage & Hour Lawyer & Attorney : Jackson Lewis Law Firm : Minimum Wage, Overtime & Service Contracts

The FLSA requires that employers pay employees for all work time, as well as for any time that the employee is “engaged to wait.”  An employee is “engaged to wait” when the employee is idle, but is constrained with respect to engaging in personal activities. Thus, the employee’s time is deemed to be “for the benefit” of the employer.  Examples may include time spent waiting to respond to on-site incidents, monitoring a work location, or maintaining a presence in a particular area for public safety reasons,. When the employee is deemed free to pursue personal interests, the employee is “waiting to engage”, and need not be compensated. The United States District Court for the Southern District of Iowa recently issued a decision analyzing and applying the  “engaged to wait” concept to lunch breaks in regard to security employees required to remain on-premises and on-call during their meal period.

Aiken v. Catholic Health Initiatives, No. 4:07-cv-018, 2010 U.S. Dist. LEXIS 79782 (S.D. Iowa 2010), concerned private security guards who worked on the premises of defendant’s hospitals.   The security guards were  allotted 30 minute unpaid meal breaks pursuant to defendant’s written policy and practice. However for the duration of this break they were required to: (1) remain on-premises; (2) carry their hospital radios;, and (3) respond to any incidents or assignments in the hospital, should they arise. If a security guard was unable to take a full thirty-minute meal break during his/her shift due to an incident, the employee was instructed to notify their supervisor so that they could be paid for the entire thirty-minute period. The security guards sought compensation for these unpaid meal periods under the FLSA

The court held that the security guards were not “engaged to wait” during this time, but rather were free to pursue personal interests, such as making personal calls, playing card games, and surfing the Internet, and therefore their meal breaks were not compensable. Although the court acknowledged that the employer derived some benefit from the security guards’ “deterrence value” when they remained on premises—especially considering that each hospital had only one security guard per shift—it nonetheless found that the “predominant benefit” of the meal break fell to the employees themselves. 

Interestingly, the security guards argued that they were free to pursue personal activities during extensive “down time” during their compensable work hours, and therefore the activities pursued during “working time” and during the meal breaks were indistinguishable and, thus, equally compensable. The court flatly rejected this argument, finding such time was plainly not work, even if the employer chose to compensate for such personal time during the actual workday. 

In rejecting Plaintiffs’ claims and holding that neither 1) the potential to have to perform work nor 2) the actual performance of work on an occasional basis converted all meals breaks to compensable time, the court did note that if the security guards’ meal breaks were interrupted with a high level of frequency then the meal breaks could potentially be considered working time. However, the interruptions here were too infrequent to rise to that level, and regardless employees were paid whenever they notified their supervisors of a meal break interruption,. 

Employers who wish to require employees to remain on-call during meal periods must be cautious of state laws and ensure that any such on-call time does not regularly restrict employees from engaging in personal activities.

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As discussed here, the FLSA contains a provision relating to the compensability of time spent donning and doffing uniforms, when the compensability of such time is addressed in a collective bargaining agreement. 29 U.S.C. § 203(o). However, even where a unionized employer through a collective bargaining agreement is not required to pay for such time, if the time is otherwise compensable under state law, the FLSA is no defense, held Judge Easterbrook of the Seventh Circuit this week. Spoerle v. Kraft Foods Global, Inc., 2010 U.S. App. LEXIS 15960 (7th Cir. Wis. Aug. 2, 2010).

Spoerle concerns the compensability of time spent putting on and taking off “safety gear, such as steel-toed boots and hard hats, plus a smock that keeps other garments clean” as well as hair nets and beard nets” at an Oscar Mayer plant in Wisconsin. Id. at * 2. The Court noted that it “takes a few minutes at the start of every day to put these items on, and a few more at day's end to take them off.” Id. Kraft Foods and the union agreed that this time is not compensable. Id. at * 2-3. However, Kraft Foods also conceded within the context of Spoerle that, but for the existence of a CBA, the time in question would be compensable under Wisconsin’s state wage law. 

As observed by the district court and reiterated by the Seventh Circuit, 29 U.S.C. § 218(a) of the FLSA states:

No provision of this chapter . . . shall excuse noncompliance with any Federal or State law or municipal ordinance establishing a minimum wage higher than the minimum wage established under this chapter or a maximum work week lower than the maximum workweek established under this chapter …. No provision of this chapter shall justify any employer in reducing a wage paid by him which is in excess of the applicable minimum wage under this chapter, or justify any employer in increasing hours of employment maintained by him which are shorter than the maximum hours applicable under this chapter.

This provision codifies an unequivocal proposition: the FLSA does not prevent states from enacting wage laws which provide greater rights to employees. The Court also specifically noted that 203(o) by its plain language is limited to calculating hours worked “for the purposes of sections 206 and 207 of this title.” Id. at * 5. Finally, as explained by the Court, the existence of the CBA did not itself preempt the state wage law because state rules that disregard, rather than interpret, collective bargaining agreements are not preempted by federal labor policy. Id. citing Lingle v. Norge Division of Magic Chef, Inc., 486 U.S. 399 (1988).

Spoerle highlights the need for every organization to develop a full and complete understanding of both the FLSA and all relevant state wage and hour laws. Employers with multi-state operations must be particularly careful to mind the niceties of individual state laws.

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As discussed here, an employer’s maintenance of accurate records of hours worked by employees is not only a substantive requirement of the FLSA, but an essential component to defending against “off the clock” claims. But what happens if an employee brings such a claim and the employer has not maintained records? Is the employer defenseless?

The answer is “Not necessarily,” as highlighted in the recent decision issued by a federal judge following an trial in the District of Maryland. Almendarez v. J.T.T., 2010 U.S. Dist. LEXIS 57371 (D. Md. June 8, 2010). In Almendarez, a jury found that all seven plaintiffs worked overtime, and that Defendants did not maintain appropriate records. However, the jury found that only three of the plaintiffs worked overtime for which they were not properly compensated. The  jury found that the employer properly compensated the four remaining plaintiffs for overtime hours worked. These four plaintiffs moved for an order that they were entitled to an overtime award as a matter of law based on the jury’s factual findings, or in the alternative for a new trial.

In denying the plaintiffs’ request, the Judge first explained that in the absence of the records required by the FLSA, evidence regarding hours actually worked and overtime paid were governed by the framework set forth in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946). To recover on an unpaid overtime claim under Mt. Clemens, a Plaintiff is “required to show, by a preponderance of the evidence, that he actually worked overtime hours for which he was not compensated at the required rate.” Almendarez, 2010 U.S. Dist LEXIS 57371 at * 11. Because making this determination in the absence of proper records is “heavily dependent on the jury's assessment of the credibility and veracity of the witnesses”, and since the jury considered the admissible evidence as to overtime hours worked and overtime compensation paid, the court held that the jury’s verdicts were not subject to reversal as a matter of law. The jury was entitled to credit the Defendant’s evidence in the form of “testimony regarding the number of hours required to complete Plaintiffs' work day and how much they were paid”, along with some “documentary evidence regarding the amounts Plaintiffs were paid in specific periods.” Id. at * 11-12. 

While the failure to maintain proper records both constitutes a likely FLSA violation and can hinder the defense of FLSA overtime actions, Defendants faced with FLSA claims for alleged unpaid working time should consider all the evidentiary means available to rebut allegations of alleged unpaid work.

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The Second Circuit recently affirmed a district court’s decision dismissing security guards’ claims for minimal amounts of allegedly uncompensated work time. In doing so, the Court reiteratedthe general principle applied by federal courts that “"[w]hen the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours, such trifles may be disregarded. . . . It is only when an employee is required to give up a substantial measure of his time and effort that compensable working time is involved." Albrecht v. Wackenhut Corp., 2010 U.S. App. LEXIS 10973 at * 3 (2d Cir. N.Y. May 28, 2010) quoting Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 (1946).

In Albrecht, the security guards alleged that time spent obtaining and returning their firearms and radios pre and post-shift constituted a “principal activity” under the FLSA, and thus was compensable. The court held that the Plaintiffs failed to controvert evidence in the record that such “arming up” and “arming down” involved only 30-90 seconds, and thus was de minimis. Id. at * 5. 

The Court acknowledged Plaintiffs’ argument that a requirement that non-exempt employees be present and available “15 minutes before the start of a scheduled shift” could give rise to a viable claim under the FLSA, but held that this claim was not properly alleged in the original complaint, which was limited to the time related to arming up and down. Id. at * 5-6.

Despite this favorable result, employers should be conservative in deeming mandatory time spent on premises to be non-compensable as a preliminary and/or de minimis activity.  In fact, the USDOL generally does not recognize the de minimus defense.

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Reinforcing the importance of properly crafted and enforced work-time tracking policies, Judge  Michael Telesca of the Western District of New York recently dismissed the balance of a plaintiff’s claims in a lawsuit alleging failure to compensate non-exempt employees for all overtime hours. The Court based its decision on the employer’s strong time tracking policies and protocols. Kuebel v. Black & Decker (U.S.) Inc., 2010 U.S. Dist. LEXIS 46533 (W.D.N.Y. May 12, 2010).

The plaintiff in Kuebel was a retail specialist responsible for the stocking, pricing and display of Black & Decker products at six Home Depot stores. Id. at * 8-9. He alleged that his supervisors instructed him to “shave” his timesheets to reflect forty hours worked each week, regardless of how many he actually worked, in contravention of Black & Decker’s written policies regarding timekeeping. Id. at * 22-23. Based on the Court’s review of the claims and plaintiff’s records of hours worked, as  reflected by his timesheets, his calendar and his company-issued PDA, the Court granted summary judgment to Black & Decker. Id. at * 32-45. 

In analyzing the Defendant’s summary judgment motion, the Court considered whether Plaintiff had demonstrated the two “essential” components of his “off the clock” claim, namely “1) the amount of uncompensated work he actually performed and (2) that defendant had actual or constructive knowledge of the amount of time that plaintiff was working off-the-clock.” Id. at * 30. 

As to the first prong, evidence of the amount of uncompensated work, the Court held that plaintiff failed to demonstrate the inadequacy of Defendant’s time records (which would have entitled Plaintiff to a lesser burden of proof). Id. at * 30-32. The time records were thus an accurate record of Plaintiff’s overtime worked. And, the Court further reasoned that based on plaintiff’s own contradictory statements regarding the percentage of his timesheets which were allegedly inaccurate, plaintiff could not prevail even if entitled to the lower standard, which typically is available to Plaintiffs in FLSA cases only where the employer has failed to maintain accurate records of hours worked. Id. Thus, Plaintiff could not provide evidence of the amount of allegedly uncompensated work he had performed. Id.

Even if plaintiff was able to present evidence of uncompensated time, the Court stated no monies would be due since plaintiff could not meet the second prong of the test, in that he failed to demonstrate that the Defendant possessed “constructive knowledge” of his uncompensated work hours, despite his allegations that Defendant’s managers instructed him to underreport his time. Id. 

In an earlier opinion in the same case, the Judge had dismissed Plaintiff’s claims for alleged unpaid commuting time. Kuebel v. Black & Decker (U.S.) Inc., 2009 U.S. Dist. LEXIS 43846 (W.D.N.Y. May 18, 2009)(commute time up to 60 minutes to and from varying job sites not compensable under FLSA).   There, the Court held that despite the fact that Plaintiff’s initial “commute” could be to any one of his six assigned stores, Black & Decker’s policy of designating the first hour of that commute as non-compensable commuting time did not violate the FLSA. The Court did not reach the question of whether the entire commute was non-compensable, as Black & Decker treated commuting time in excess of the first hour as compensable.

Kuebel demonstrates that it is possible for an employer to obtain summary judgment on a claim for alleged unrecorded unpaid work time even where that employee is a “field” employee not under the employer’s roof and immediate supervision. It is essential for all employers to ensure that their timekeeping policies comport with applicable federal and state law, expressly prohibit “off the clock” work and clearly and unequivocally advise employees to report all hours worked. 

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The Ninth Circuit recently revised and reissued its earlier opinion in Rutti v. Lojack Corp., No. 07-56599 (9th Cir. Mar. 2, 2010), holding upon further review that the Plaintiff’s commuting time is compensable under California law, while continuing to find that such time  is not compensable under the FLSA. The Court did not change its ruling that time spent on the required post-shift activity at issue in the case – the daily transmission of data – was compensable.

The Plaintiff, an automotive technician, installed and repaired vehicle recovery systems for the employer. Because technicians perform most of their duties at the clients’ locations, the employer required Plaintiff to use a company-owned vehicle to travel to clients’ sites. The employer prohibited technicians from carrying passengers in the company vehicles and from using the vehicles for personal business. The technicians also were required to keep their cell phones on while driving.

The employer paid Plaintiff on an hourly basis for the period beginning when he arrived at his first job and ending when he completed his final job, but not any commuting time. Plaintiff, on behalf of himself and all technicians, sued the employer to recover compensation for commuting time and for alleged preliminary and post-shift activities.

Addressing Plaintiff’s claim that the commuting time should be compensable under California law, the Court concluded that the district court erred in granting summary judgment to the employer. California law requires that employees be compensated for all time “during which an employee is subject to the control of an employer.” Morillion v. Royal Packing Co., 22 Cal. 4th 575, 578 (2000). In Morillion, the California Supreme Court held that the plaintiffs were “subject to the control” of their employer during a mandatory bus commute because “plaintiffs could not drop off their children at school, stop for breakfast before work, or run other errands requiring the use of a car.” The California Supreme Court reasoned the “[p]laintiffs were foreclosed from numerous activities in which they might otherwise engage if they were permitted to travel to the fields by their own transportation.”

Similarly, in Lojack, Plaintiff was required to drive the company vehicle, could not stop off for personal errands, could not take passengers, was required to drive the vehicle directly from home to his job and back, and could not use his cell phone while driving, except to answer calls from the company dispatcher. Accordingly, the Court found that “Plaintiff was under Lojack’s control while driving the Lojack vehicle en route to the first Lojack job of the day and on his way home at the end of the day.” Thus, the Court held that his commute was compensable under California law.

Employers that provide company vehicles and have restrictions regarding their use should expect increased challenges to their policies and claims that employees’ commutes are “compulsory,” rather than ordinary.  A more detailed analysis of the  Lojack decision is available here.

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